Nonprofits Need to Get it Together

by Todd Cohen

A lot of nonprofits, boards and funders are in serious denial.

Many are in a deep financial hole, yet precious few can talk straight to their funders about their problems.

Compounding the communications gap, many boards do not understand their nonprofits’ expenses, and far too few use their connections to help their nonprofits raise money.

Those are some of the findings from a new survey by the Nonprofit Finance Fund that offers a grim view of the way nonprofits are faring in the stricken economy.

Among over 4,600 nonprofits surveyed, for example, 85 percent saw rising demand for services in 2011, 88 percent expect greater demand this year, and 57 percent have only enough cash on hand to last three months or less.

Among human-services organizations, which represent 38 percent of nonprofits surveyed, 58 percent could not meet demand in 2011, and 60 percent said they would not be able to meet demand in 2012.

The charitable marketplace is consumed with big talk about the need for transparency, yet many nonprofits, along with their boards and their funders, operate with their heads in the sand.

Nonprofits’ survival depends on their ability and willingness to communicate more honestly and openly with their funders, while educating their boards about their finances and enlisting them in the fundamental job of fundraising.

For their part, boards need to take their governance and fundraising responsibilities seriously.

Instead of sleeping through board meetings and rubber-stamping whatever the staff puts in front of them, boards need to ask tough questions about the financial health of the organization.

And they need to step up and do a lot more to use their connections to help raise money for their nonprofits.

Funders also need to do more, both in providing the operating and capacity-building support nonprofits need, and also in establishing the trust that is essential if they expect nonprofits to talk openly and candidly about their financial and operating problems.

If nonprofits, boards and funders do not wake up soon, nonprofits will continue to struggle, leaving as victims the clients who count on them to provide the programs and services they need more than ever in our shattered economy.

Todd Cohen is editor and publisher of Philanthropy Journal; reprinted with permission.